CommScope has decided to acquire TE Connectivity’s telecom, enterprise and wireless businesses for nearly $3 billion.
The telecom business of TE generated sales of $1.9 billion in 2014.
Out of $1.9 billion revenue, $1.1 billion came from its telecom business, $627 million from enterprise and $164 million from wireless.
The strategy of CommScope is to drive growth by entering into attractive adjacent markets and to broaden its position as a leading telecom infrastructure provider. CommScope will also benefit from geographic and business diversity.
The sale does not include TE’s subsea communications or data communications businesses.
CommScope CEO Eddie Edwards said: “It creates scale with a combined, diversified portfolio that we believe is well-positioned to take advantage of opportunities in the marketplace.”
Gains to CommScope
CommScope will be adding expanding into the adjacent wireline telecom networks / fiber-to-the-X (FTTx) market and broadband services in developed and emerging markets.
CommScope’s sales mix would be more balanced based on the 12 months ending September 30, 2014:
Wireless: 46 percent of sales against versus 65 percent
Enterprise: 26 percent of sales against 22 percent
Broadband Connectivity: 28 percent of sales against 13 percent
TE Connectivity’s presence in Europe, Middle East, Africa and Asia Pacific regions will strengthen CommScope.
CommScope will gain from 7,000 patents and patent applications worldwide from TE Connectivity.
TE Connectivity’s leading fiber technology is expected to help CommScope address a transition to fiber deployments deeper into networks and data centers as consumers and businesses generate increasing bandwidth requirements.
CommScope expects to realize more than $150 million in annual synergies beginning in the third year following closing, which includes more than $50 million in the first full year.
TE Connectivity’s Telecom, Enterprise and Wireless businesses will contribute approximately 10,000 people and 65 facilities to CommScope.
Strategy of TE Connectivity
The strategy of TE Connectivity to sell its BNS business reflects its focus in the connectivity and sensor markets, with particular emphasis on harsh environment applications. These markets represent a $165 billion opportunity for TE.
90 percent of TE’s revenue will be focused on providing customers with leading connectivity and sensor solutions.
“Earlier this fiscal year, we established TE as a leader in the high growth sensor market with two key acquisitions. These acquisitions, in conjunction with the sale of BNS, will result in approximately 90 percent of TE’s portfolio focused on providing leading connectivity and sensor solutions,” said Tom Lynch, chief executive officer of TE Connectivity.
Baburajan K
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